Kate O'Neill & Sarah Rapson discuss the latest Audit Quality Review results
20 July 2022
In this episode Kate O'Neill (Director of Stakeholder Engagement and Corporate affairs) speaks to Sarah Rapson (Executive Director of Supervision)about the FRC's recently published annual inspection and supervision results of the largest audit firms (BDO, Deloitte, EY, Grant Thornton, KPMG, Mazars and PwC). Overall, 75% of audits inspected were good or required limited improvement (compared to 71% in 2021 and 67% in 2020).
The number of audits considered good or requiring limited improvement has improved on the previous two years. It is clear that a combination of the FRC’s increasingly assertive supervision approach, as well as investment from the firms in their systems, people and capabilities to improve audit quality, is starting to have a positive impact.
Encouragingly, five of the largest firms had no audits requiring significant improvements. KPMG’s individual audit inspections have significantly improved, which is promising, but is not yet a trend. The FRC will continue to closely monitor KPMG banking audits.*
The inspection results at Mazars and BDO remain unacceptable. Four of the eight audits reviewed at Mazars, and five of the 12 audits reviewed at BDO required more than limited improvements. Specific supervisory plans have been developed to closely monitor BDO and Mazars’ priority actions. The FRC will continue to ensure the challenger firms are prioritising high quality audit with a view to offering increased choice and resilience in the market, but growth ambitions must also be tempered by a focus on quality first and foremost.